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Housing Market Stunts Air Care Growth

By: Carrie Lennard, Euromonitor International
Posted: July 6, 2009, from the July 2009 issue of GCI Magazine.

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Millions of consumers in these markets have been lifted out of absolute poverty, and these emerging lower middle-class consumers have been the main driver of growth in sales of air care. For example, the proportion of Brazilian households with an annual disposable income of more than $10,000 expanded from 15.7% to 53.9% between 2003 and 2008.

Moreover, Brazil’s urban population grew from 149 million to nearly 165 million between 2003 and 2008, while its rural population declined from nearly 33 million to just more than 29 million. This is important to air care marketers because urban consumers are far more likely to purchase air care products than their rural counterparts. In India, Euromonitor International data shows that, although sales of air care products have been growing strongly in rural areas, urban consumers in this market still accounted for 90.5% of sales during 2008. However, the short-term prospects for growth in developing markets should not be exaggerated. Developing economies have not “decoupled” from their developed counterparts, and it is likely that growth in air care in many of these markets will slow, perhaps significantly, during 2009 as unemployment rises, income growth declines and urbanization slows.

SC Johnson Retains Global Market Leadership

In terms of global market share, SC Johnson & Sons dominance of the air care sector has weakened slightly during recent years, declining from a peak of 32.9% in 2005 to 28.9% during 2008, according to Euromonitor International. Although its Glade/Brise brand remains strong in many emerging markets, it is coming under increasing pressure from indigenous rivals in those markets—notably from Jiangsu Tongda Aerosol in China. In Russia, its market share more than halved (from 42.6% to 19.2%) between 2001 and 2008 as both indigenous challengers (such as Arnest AOA) and multinationals (such as Sara Lee) have built their market presence.

However, the biggest cause of its dip in global market share has been the weak U.S. market, where it has lost sales to Reckitt Benckiser’s Air Wick brand—largely due to SC Johnson’s poor performance in electric air fresheners and candle air fresheners.

Reckitt Benckiser Reaps Rewards of Aggressive NPD Strategy

Reckitt Benckiser has grown its market share from 15.2% to 18.9% between 2001 and 2008. This success has been due in large part to aggressive strategy of new product development. Recent examples include a mini version of its Air Wick Freshmatic Automatic Spray, which features a timer to enable consumers to set the air freshener to release its fragrance at regular intervals, and Air Wick Hidden Pleasures Nite Light Scented Oil. Sara Lee, the third-largest player globally, has struggled to maintain its market share, which stood at 7.5% during 2008. Its main air care brand, Ambi-Pur, is positioned in the mid-priced-to-premium segment, and is thus particularly exposed to the chill winds of a recessionary economic environment. Outside of the top three, Procter & Gamble is rapidly expanding its presence in air care, accounting for 5% of sales during 2008 in a market it only entered in 2004. This was due in part to the successful launches of Febreze Noticeables (2006) and Febreze Candles (2007) in the U.S. market.

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